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Royal Mail operating profit up 4% Royal Mail operating profit up 4%
(about 1 hour later)
Royal Mail has reported an operating profit of £184m for the six months to September, up 4% on the same period last year. Royal Mail has reported an operating profit of £184m for the six months to September, up 4% from a year ago.
But the company also announced that it had paid more than £300m into its pension fund over the period.But the company also announced that it had paid more than £300m into its pension fund over the period.
Royal Mail's pension fund deficit is being revalued and is expected to reach £10bn, compared with £3.4bn at the last valuation three years ago. It said its pension fund deficit was being revalued and was expected to reach £10bn, compared with £3.4bn at the last valuation three years ago.
The company said reducing the deficit remained a "daunting challenge". Revenues for the half-year fell £73m to £4.58bn, hit by the continuing decline in mail volumes and the recession.
Royal Mail said its letters business had seen letter volumes fall to 72 million items a day, down by three million from last year. Royal Mail said its letters business had seen volumes fall to 72 million items a day, down by three million from last year.
But the firm said the rise in operating profits was an indication that the modernisation of its letters business was working. Employment costs were £170m lower than in the same period last year. Royal Mail says that 60,000 people have left the group since 2002, with 5,000 job losses in the six months to September.
Driving efficiency
Royal Mail said the rise in operating profits was an indication that the modernisation of its letters business was working.
"Everyone working the hours for which they are paid, working flexibly and using new equipment we're investing in... have helped drive efficiency and offset the effects of volume decline," said Royal Mail chief executive Adam Crozier."Everyone working the hours for which they are paid, working flexibly and using new equipment we're investing in... have helped drive efficiency and offset the effects of volume decline," said Royal Mail chief executive Adam Crozier.
Royal Mail says it is two-thirds through the implementation of its plans, the details of which sparked a number of strikes earlier this year.Royal Mail says it is two-thirds through the implementation of its plans, the details of which sparked a number of strikes earlier this year.
Profits were made in all four businesses within the Royal Mail group: the Post Office, Royal Mail letters, Parcelforce Worldwide, and its European parcels business GLS. The plans, which will cost a total of £2bn, include:
  • the roll out of walk sequencing machines which sort the mail for a route
  • the installation of large flat sorters which sort larger items such as catalogues and magazines
  • more "intelligent" letter sorting machines which sort mail faster and more efficiently
Profits were made in all four businesses within the Royal Mail group: the Post Office, Royal Mail Letters, Parcelforce Worldwide, and its European parcels business GLS.